Correlation Between Cisco Systems and KraneShares CSI

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and KraneShares CSI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cisco Systems and KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisco Systems and KraneShares CSI China, you can compare the effects of market volatilities on Cisco Systems and KraneShares CSI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cisco Systems with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and KraneShares CSI.

Diversification Opportunities for Cisco Systems and KraneShares CSI

-0.37

Correlation Coefficient

Cisco Systems  KraneShares CSI

Very good diversification

The 3 months correlation between Cisco and KraneShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and KraneShares CSI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares CSI China and Cisco Systems is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cisco Systems are associated (or correlated) with KraneShares CSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares CSI China has no effect on the direction of Cisco Systems i.e., Cisco Systems and KraneShares CSI go up and down completely randomly.

Pair Corralation between Cisco Systems and KraneShares CSI

Given the investment horizon of 90 days Cisco Systems is expected to under-perform the KraneShares CSI. But the stock apears to be less risky and, when comparing its historical volatility, Cisco Systems is 1.25 times less risky than KraneShares CSI. The stock trades about -0.01 of its potential returns per unit of risk. The KraneShares CSI China is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,391  in KraneShares CSI China on July 2, 2025 and sell it today you would earn a total of  804.00  from holding KraneShares CSI China or generate 23.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cisco Systems  vs.  KraneShares CSI China

Cisco Systems

Risk-Adjusted Performance

Weakest

Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

KraneShares CSI China

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares CSI China are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, KraneShares CSI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cisco Systems and KraneShares CSI

The main advantage of trading using opposite Cisco Systems and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, KraneShares CSI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KraneShares CSI will offset losses from the drop in KraneShares CSI's long position.

The idea behind Cisco Systems and KraneShares CSI China pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.